Investor believes that until detailed accounts emerge, suspicions will mount that festival was an elaborate Ponzi scheme and buried in debt before it even began

Investors in the ill-fated Fyre Festival in the Bahamas will begin to assert legal claims against organizer William Billy McFarland this week in what is likely to be a protracted effort to recover assets from the supermodel-fronted luxury private-island music festival that collapsed in spectacular discord last month, stranding hundreds.

The first petition to freeze festival assets to get a court hearing comes from Oleg Itkin, a Manhattan investor who says he handed over a $700,000 loan from January to April to fund a Fyre-branded app designed to streamline the process of booking entertainers for private and corporate events.

Itkin claims McFarland showed him a projected income statement showing $932m in proceeds from the festival and the app. Lawyers for Itkin provided documents showing organizers claimed $31m in assets in January, including land in Grand Exuma valued at $8.4m.

Itkin claims organizers told him the festival had secured $4.2m in bookings from acts including Drake, Kendrick Lamar, Iggy Azalea and Ja Rule, one of the founders of Fyre Media. The app is no longer available, as the festivals legal woes mount.

While many investors tied their stakes to Fyre Festival, Itkin tied his investment to the Fyre Media app. They made Fyre appear to be a good investment, says Itkins lawyer, Michael Quinn. But McFarland defaulted on the loan, and other investors, ticket holders, employees and vendors have been unable to recoup their money. No one is seeing what theyre owed.

Quinn believes that until organizers produce detailed accounts for the festival, suspicions will mount that it was an elaborate Ponzi scheme doomed to leave investors disappointed. McFarland will potentially be seen as the Madoff of the millennials, Quinn says, referring to convicted fraudster Bernie Madoff.

Recent reports suggest the festival, which appeared to promise ticket holders a luxury experience weekend, potentially cavorting with models and social media stars including Kendall Jenner, Bella Hadid and Emily Ratajkowski, was buried in debt before it even began.

As it unfolded, hundreds of ticket holders found themselves stranded on Grand Exuma with little accommodation, poor food and no live music. The celebrity models were apparently warned off before the event got under way. Some who attended likened conditions to a refugee camp.

The organizers used Instagram and Snapchat to garner interest, and Billy McFarland was going to follow in the footsteps of Bill Gates and Mark Zuckerberg, Quinn says. It was going to be models and yachts. But the luxury experience turned into a disaster. Everything hed promised to investors, ticket holders, and everyone else, he couldnt come up with.

In the weeks since the event, recriminations and lawsuits have mounted, including a $100m class-action suit filed by vendors and ticket holders in Los Angeles, alleging that the music festivals lack of adequate food, water, shelter, and medical care created a dangerous and panicked situation among attendees suddenly finding themselves stranded on a remote island without basic provisions. That lawsuit goes on to describe the Fyre Festival as The Hunger Games or Lord of the Flies.

In addition to Itkin, private investors who are taking legal action include Carola Jain, the wife of a prominent New York hedge funder Bob Jain, and Ezra Birnbaum, a partner in EHL Holdings, who claims his companys $3m loan was to be repaid with money Fyre received for festival-related purchases.

But image and reality proved to be in sharp disagreement. Marketing documents seen by the Guardian instructing staff how to sell extra VIP packages to guests show that even through mid-April, reps for the festival were directed to promise performances on the main stage and Coco Plum Beach performances that would be playing daily from 12pm through 12.30am. Yacht and pop-up club after parties with additional performers will run from 12.00pm through sunrise.

Organizers described they had built a modern eco-conscious dome-city for guests. Their tents would include beds, linens, solar lights and other furniture (like a mirror, a chair) to make your stay more comfortable. They continued: Weve spent lots of time making sure the layout and design is conducive to your needs.

In addition, organizers promised a beachside kick-off BBQ sure to be a great way to meet other festival goers in a more intimate setting and directed event reps to pitch ticket holders with a yacht party brunch, VIP tables starting at $2,500 and artist pass tables at $10,000-$15,000.

The script read: We are also offering 2 tables for up to 12 guests at $20,000. This package includes 4 premium bottles, 3 champagne bottles, mixers, 12 energy drinks, 24 beers, and 24 waters.

On the eve of the festival the company reopened the ability to add funds to ticket holders electronic wristbands, suggesting festival-goers would need around $300 per day over the three-day event.

But it was already unraveling. Bloomberg News has reported documents that show that the media giant Comcast abruptly pulled out of an investment in the Fyre booking app days before the festival was due to kick off, depriving Fyre of $10.5m in new investment. At that time, documents show, Fyre claimed a valuation in excess of $90m.

Documents supplied by EHL indicate around $750,000 remains unaccounted for, while a conference call between co-founder McFarland and Fyre Media employees leaked to Vice confirmed that payroll will not be met.

Sources say the Manhattan district attorney has requested copies of the legal filings. But an investors lawyers say that if the Exuma land Fyre Festival claimed as a material asset does not exist, the case could escalate to a criminal complaint.

Thursdays hearing before Judge Saliann Scarpulla at the commercial division of the New York state court could prove the first step in untangling the affair. This could be our only chance to recoup, Quinn says. We want to preserve any assets belonging to McFarland or the corporation as fast as possible because McFarland could declare bankruptcy and the assets will disappear.

Neither legal representatives for McFarland nor the Fyre Festival returned requests for comment.